Climate & energy PaPer SerieS 2012

Climate of DeSPair?tHe fUtUre of U.S. Climate PoliCy anD gloBal negotiationS

nigel PUrviS

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Climate of Despair?The Future of U.S. Climate Policy and Global Negotiations

Climate & Energy Policy Paper Series

March 2012

Nigel Purvis1

Climate Advisers and The German Marshall Fund of the United States

1 Nigel Purvis is president of Climate Advisers and a senior fellow at the German Marshall Fund of the United States. Samuel Grausz contributed substantially to this paper. The policy recommendations presented here build on prior work with Abigail Jones.The views of the author do not necessarily reflect those of the German Marshall Fund of the United States.

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Drifting Global Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

America Adrift . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Climate of Despair? 1

Introduction

The world remains in the grip of a lingering climate policy recession, which began when the tsunami of the 2008 financial crisis and

recession swept away mounting desires to confront global warming. This year, once again, the climate agenda will be overwhelmed by plenty of imme-diate political and economic issues, including the ongoing euro crisis, high unemployment rates, and instability in the Middle East, Afghanistan, and elsewhere, as well as potential leadership changes in China, France, the United States, and other major economies. Despite a real urgency, 2012 offers the world yet another unwelcome period of insufficient climate action.

Yet this is not why many in the climate protec-tion community inside and outside government feel depressed. No, it’s the perceived slim odds of progress in 2013 and beyond that has dispirited all but the most perpetually optimistic. Many factors contribute to this pessimism but none more promi-nently than the slow pace of global climate negotia-tions and the baffling climate politics of the United States.

In this essay I seek to determine whether circum-stances warrant this new climate of despair. Are global climate negotiations going to deliver and, if so, what and when? Are Americans really heading into the climate abyss by handing power to global warming skeptics? I conclude that global climate negotiations, while essential, will produce only a modest international agreement and probably not before 2020. I also conclude that the United States will do more than many predict, but far less than the world needs of it. While the November 2012 elections will certainly influence the U.S. emissions trajectory, U.S. emissions are likely to decline over this decade regardless of who captures the White House and Congress, although they would do so more steeply under President Obama than any Republican rival.

Climate of Despair? 3

Drifting Global Negotiations1

The combined global mitigation effort is expected to be less than half of what the world needs to stay within 2°C.

In December 2011, climate diplomats from around the world ended the latest in a long string of marathon negotiating sessions — this time

in Durban, South Africa — by producing a new “road map” for climate cooperation. The Euro-pean Union’s chief negotiator, Connie Hedegaard, described the political agreement as an “historic breakthrough.”1 Other diplomats used even grander terms, calling it “hugely important not just for the climate talks but in geopolitical terms.”2 Was it? To take stock of the Durban road map, in this section I explore the broad arc of climate diplomacy from its origins in the early 1990s until today, and seek to decipher where the Durban outcome leads.

The Growing Emissions Gap

One must judge climate diplomacy on its results, and for that one needs clear goals and good data. Most nations at the Copenhagen climate summit in late 2009 endorsed the near-scientific consensus that countries should limit global warming to no more than 2° Celsius.3 In November 2011, the United Nations Environmental Program (UNEP) found a major gap between this political rhetoric and real world action. A simplified version of the

1 “European Union Hails ‘Historic Breakthrough’ at UN Climate Talks - The Economic Times,” The Economic Times, n.d., http://economictimes.indiatimes.com/news/politics/nation/european-union-hails-historic-breakthrough-at-un-climate-talks/article-show/11071604.cms.2 Fiona Harvey, “Durban Talks: How Connie Hedegaard Got Countries to Agree on Climate Deal,” The Guardian, December 11, 2011, sec. Environment, http://www.guardian.co.uk/environ-ment/2011/dec/11/connie-hedegaard-durban-climate-talks.3 Small island states and other vulnerable nations have endorsed limiting global warming to 1.5°C. India and other major emerging economies have refused to set long-term goals until nations allocate responsibility for meeting those goals. Many nations support the 2°C target. In Copenhagen, world leaders “recogniz[ed] the scientific view that the increase in global temperature should be below 2°C.” Copenhagen Accord, December 18, 2009.

UNEP assessment is presented in Figure 1.4 The graph shows that while emissions may be growing more slowly than before, the combined global mitigation effort is expected to be less than half of what the world needs to stay within 2°C. The next few pages examine the likely contribution of global climate negotiations to efforts to close this gap.

Waiting for Godot?5

For more than two decades, the international community through global negotiations at the United Nations (with varying degrees of serious-ness over time) has tried to create a single, coherent climate protection system. In foreign policy and philosophical terms, the approach has been entirely Wilsonian or Hegelian.6 Driven by big ideas and principles, nations have sought to create a new ethical, political, and institutional framework for global collective action — a new world economic order. Many nations (most of all in Western Europe and small island states) and civil society groups (from all around the world) have invested heavily in these global climate negotiations — emotionally, economically, and politically. I personally have been part of this process, in one way or another, since the 1997 Kyoto conference.

Collectively, those involved have made a number of idealist assumptions. At least implicitly, we believed that most major nations: 1) shared with sufficient urgency the objective of stopping climate change, 2)

4 The line labeled “Emissions without Copenhagen Pledges” is taken from the “Business as Usual” case in the UNEP Report. The range entitled “Emissions with Copenhagen Pledges” is based on “Case 1” and “Case 4” of the UNEP report. UNEP, Bridging the Emissions Gap to Meet 2-Degree Target Doable - UNEP (UNEP, November 2011), http://www.unep.org/news-centre/default.aspx?DocumentID=2659&ArticleID=8955.5 A reference to the play by Samuel Beckett, in which the charac-ters wait in vain for the title character, who never appears.6 U.S. President Woodrow Wilson believed strong international institutions and norms of behavior could keep international peace and security. This view is often described as foreign policy idealism, the origins of which some attribute to German idealist philosopher Georg Wilhelm Friedrich Hegel.

The German Marshall Fund of the United States4

could agree on a long-term vision or goal for doing so, 3) could allocate rights and responsibilities for achieving that goal in politically, ethically, socially, and economically acceptable ways, and 4) could ensure fair and effective implementation through (often new) global institutions. While participants in the global negotiating process never consid-ered these tasks easy, we did assume that nations could overcome the classic barriers to interna-tional collective action — imperfect information, poor coordination, weak global governance, and misaligned national incentives. The system would be designed globally and filter down to the regional, national, and local level, much as directives from the European Commission influence action within Europe.

Have these assumptions proven true? While nations do not completely disregard climate change,

confronting it has not been a high priority, espe-cially compared to pursing economic growth via a carbon economy. After two decades of promises, nations representing three-quarters of the world’s emissions have still not accepted any internation-ally negotiated emissions target. At present, there is no agreed formula for allocating responsibility for both mitigation and adaptation costs among devel-oped and developing nations, let alone country-by-country. Further, most nations have opposed creating strong global institutions and mechanisms to ensure compliance with their own climate commitments — although most countries happily support the idea of such institutions for policing other nations. Traditional climate diplomacy may create a clear framework for action one day, but it hasn’t so far.

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Figure 1: Growing Gap in Global Emissions

Source: UNEP

Climate of Despair? 5

Some argue that climate negotiations have hindered as much as they have helped. Much has been written about how UN climate negotiations are plodding and dominated by professional negotia-tors who act as a sort of priesthood (or mafia) that values process and continuity more than progress. The rules of procedure invite delay and obstruction. It is often impossible to negotiate publicly with 193 other countries, yet smaller negotiations are often resisted. Rules that require decisions by consensus are sometimes interpreted to require unanimity — nearly impossible given the diversity of interests, including those of oil-producing states. The process itself, in short, makes climate diplomacy deeply challenging to say the least.

Even if one disagrees with this assessment, it’s hard to dispute the facts about global emission trends. In 1992, nations approved the United Nations Frame-work Convention on Climate Change (UNFCCC) — the first multilateral climate change treaty. Under that agreement, all nations agreed to mitigate emissions in general terms and developed nations made a more specific pledge, albeit nonbinding, to reduce their emissions to 1990 levels by 2000. Instead, emissions from developed nations rose 12.7 percent by 2000 and global emissions rose 12.1 percent.7 In response to this burgeoning failure, the world negotiated the 1997 Kyoto Protocol with new legally binding mitigation commitments. Yet, the Kyoto targets only applied to developed nations and not to China, India, and other emerging economies where emissions were and are growing fastest. For that reason, the United States refused to partici-pate. Even many developed nations that did agree to Kyoto targets did little in terms of emissions reductions. Canada accepted a Kyoto target but then withdrew from the treaty after doing little for 7 Percent changes based on 1992 and 2000 emissions of CO2, not including other greenhouse gases due to data limitations. Emis-sions include international bunkers but not land-use change and forestry. Emissions for developed nations represented by OECD emissions. World Resources Institute, “Climate Analysis Indica-tors Tool,” February 22, 2012, http://cait.wri.org/.

years. Russia, Ukraine, and even Australia negoti-ated Kyoto targets that required nothing or next to nothing in the way of new climate policies. As a consequence, global emissions today are 42 percent higher than 1990 levels.8

More recent efforts to craft a third major climate treaty also have not produced results yet. Negotia-tions began in 2007 at Bali and were supposed to end in 2009 at Copenhagen. Yet, as discussed at the outset of this section, the climate policies pledged by nations at Copenhagen and since allow global emissions to continue to rise — and that assumes that nations fully implement their pledges, which experience shows is unlikely.

Despite the bleak indicators, there are signs of progress. The Kyoto Protocol has succeeded in some important ways. Europe is on track to meet its commitment to reduce emissions 8 percent below 1990 levels by the end of 2012. Japan and a number of other developed nations are also likely to accomplish their goals thanks to financing emis-sion reductions abroad. Additionally, some rightly argue that the bald emission numbers obscure important progress. Global climate negotiations have increased public awareness and this has helped push national and regional climate policies forward. This was the case in both Kyoto and Copenhagen, both of which were preceded and followed by intensive policy making at the national and regional level. High international expectations can help spur domestic policies.

More often than not, however, efforts to forge climate treaties have been constrained by domestic political and economic realities. In fact, it is fair to say that UN climate negotiations have been a lagging indicator. The UN treaty process gener-ally has tweaked, ratified, and legitimized political agreements that were first worked out domestically

8 Ibid.

The German Marshall Fund of the United States6

with key interest groups or internationally among a small number of countries. The 2009 Copen-hagen accord and 2010 Cancun agreement follow the principles articulated by the G20 in 2009, for example.

It is often said that the global economy is like a supertanker moving briskly through the ocean. Any course correction takes time to implement and, in the case of climate change, a full 180-degree turn is required. This is all true enough, but after 20 years of climate diplomacy, global emissions are still rising. While economic activity is less carbon-intensive than before — meaning the amount of carbon produced per unit of GDP has gone down — dramatic global economic growth has offset these gains many times over.9 From a climate perspective, the news has been mostly bad.

Durban and Beyond

As noted above, some European politicians see the recent Durban conference as a turning point. Was it? The core of the Durban outcome (the “Platform for Action”) is remarkably short — under 600 words. In it, nations agreed to negotiate, under the UNFCCC and by 2015, a new legally binding climate agreement applicable to all parties. This protocol (or other instrument with legal force) is to come into effect by 2020, presumably covering the period from 2020 to perhaps 2030. Nations also agreed to begin a new political dialogue now — before the new Protocol is elaborated — to explore ideas and options for closing the mitigation ambi-tion gap toward the 2°C goal even prior to 2020.

From a strictly legal perspective, the Durban deci-sion guarantees little in the way of climate action. Just because all nations may become parties to the new protocol doesn’t mean that the agree-

9 The carbon intensity of the global economy decreased 20.6 percent from 1992 to 2008. This includes emissions from inter-national bunkers but not from international land-use change and forestry. Ibid.

ment will require them to take ambitious action. Indeed, the UNFCCC today applies to virtually all countries and requires no tangible, measurable action. Furthermore, China and India were parties to Kyoto but did not have mitigation targets under that agreement, as discussed above. Similarly, the new political dialogue on the ambition gap has not obligated nations to increase their mitigation efforts, but merely to participate in what could easily become a fruitless debate.

But a strictly legalistic reading of the Durban text misses a number of important political develop-ments. In Durban, China and India agreed that their responsibilities for the period beginning in 2020 would be spelled out in the same legal instru-ment covering developed nations. This potentially breaks down the wall between developed and devel-oping nations constructed in 1995, when nations agreed on the so-called Berlin mandate that gave rise to the Kyoto Protocol. The return to a single, all-inclusive agreement, some argue, indicates that emerging nations will soon be ready to accept for the first time legally binding emission abate-ment commitments. To bolster this claim, some commentators note that in Durban, the political dynamics among developing nations were encour-aging. Whereas once China and other major emit-ters caucused with least developed nations in the so-called Group of 77, in Durban major emerging economies huddled among themselves and least developed nations uncharacteristically adopted positions at odds with their larger cousins.

U.S. and EU climate negotiators also draw atten-tion to the fact that, with developing country support, they successfully kept out of the Durban text phrases that China and India have tradition-ally used to ward off mitigation commitments,

After 20 years of climate diplomacy,

global emissions are still rising.

Climate of Despair? 7

including references to international “equity” and “common but differentiated responsibilities.”10 Furthermore, China’s chief climate negotiator, Xie Zhenhua, outlined in conditional terms for the first time the circumstances under which China would accept new mitigation obligations in a climate treaty.11 While China’s conditions were numerous and perhaps impossible to satisfy, China had not previously raised the possibility that it might accept an emissions target. In short, Durban certainly exceeded low expectations. This was thanks in large measure to European leadership — specifi-cally, Europe’s willingness to be subject to the Kyoto Protocol through 2020 even though the United States, Japan, Russia, and Canada will not be. In this political context, Durban may yet prove to be the turning point that politicians declared.

However, the Durban outcome must be kept in perspective. Consider three specific points. First, neither China nor India believe they made major concessions in Durban, and in the months and years ahead, they are likely to continue past efforts to carve themselves out of new climate obliga-tions. Indeed, China and India both signaled in their required post-Durban filings to the UNFCCC that they do not intend to expand their mitiga-tion activities before 2020 and would only increase mitigation after 2020 in exchange for financing from developed countries.12 Those filings follow on similar statements from the negotiators from

10 Lisa Friedman and Jean Chemnick, “Durban Talks Create ‘Platform’ for New Climate Treaty that Could Include All Nations,” ClimateWire, December 12, 2011, http://www.eenews.net/public/climatewire/2011/12/12/1.11 Lisa Friedman, “Green Groups Claim U.S. Is Blocking a Climate Change Deal,” ClimateWire, December 5, 2011, http://www.eenews.net/public/climatewire/2011/12/05/1.

12 Lisa Friedman, “India Hits Brakes on Durban Pledges; Poorer Nations Want Climate Talks to Accelerate,” ClimateWire, March 8, 2012, http://www.eenews.net/climatewire/2012/03/08/archive/2?terms=china+durban; Lisa Friedman, “China Joins India in Asking Industrial Nations to Cut Emissions First,” Climate, March 9, 2012, http://www.eenews.net/climatewire/2012/03/09/archive/7?terms=china+durban.

the two countries. China’s number two climate negotiator, Su Wei, stated, “the framework and the principles, the basic structure of the framework and the current division of developed and devel-oping countries will continue.”13 India seconded this point, with Nitin Desai, a member of Prime Minister Singh’s Council on Climate Change, stating that there are “differing opinions” within the Indian government on whether the Durban agree-ment mandates that the new legal instrument apply equally to all major emitters.14 Based on the current stances of China and India and recalling the history of the negotiations, one must reasonably assume that climate negotiations will move slowly under the best of circumstances — perhaps even missing the 2015 deadline. One should assume that negotia-tions might produce a somewhat ugly, frustrating compromise between the defenders of the old order and the champions of the new Durban spirit.

Second, Durban clarified that, apart from the EU and a few other climate leaders, most major econo-mies will not have binding mitigation obligations through 2020. Many European governments and climate advocates from around the world left the collapsed Copenhagen climate summit in 2009 intent on securing a new legally binding climate agreement no later than 2012. In retrospect, that expectation seems overly optimistic. Following Durban, most major economies outside Europe will be free to set their own level of mitigation ambi-tion until the end of the decade at least. While it is possible that the new political dialogue created in Durban to look at the mitigation ambition gap could yield results before 2020, past efforts to

13 Lisa Friedman, “Top China Climate Negotiator Says Durban Talks Did Not Resolve Kyoto Issues,” ClimateWire, January 12, 2012, http://www.eenews.net/climatewire/2012/01/12/archive/5?terms=india+negotiator+durban.

14 Lisa Friedman, “U.S. and India Open Fresh Talks on Climate Obligations,” ClimateWire, February 15, 2012, http://www.eenews.net/climatewire/2012/02/15/archive/6?terms=india+durban.

The German Marshall Fund of the United States8

examine the adequacy of commitments have either gone nowhere or taken a long time to yield genuine results. The world launched the Kyoto Protocol in 1995, for example, and yet the agreement did not enter into force until 2005. By that yardstick, working out a deal on the emissions gap before 2020 seems unrealistic. No, the most likely outcome is that nations will stick to the climate targets and policies they announced in 2009 for the better part of this decade.

Third, the Durban outcome still leaves plenty of ambiguity about the level of ambition and effective-ness of the post-2020 agreement. A weak agree-ment, even if legally binding, is imaginable and would do little to solve the climate crisis. China,

India, the United States, and many others may work together to ensure that the new agreement has modest emission abatement obligations. Moreover, the new agreement may not resemble the Kyoto Protocol in structure, with internationally negoti-ated targets and economically significant noncom-pliance consequences. In fact, that is rather unlikely. Figure 2 helps illustrate why an unambitious agree-ment with few sticks to ensure compliance may be the most likely outcome for 2020.15 The vertical axis depicts the degree to which nations are willing to have their own mitigation efforts negotiated through a “top-down” science-based global burden-15 A version of this chart was first published in my GMF paper Rethinking Climate Diplomacy in 2010. It is updated here to reflect changes in policy and environmental conditions.

Figure 2: International Climate Policy Preferences: The International Arrangements Nations Want Applied to Themselves

United States, China, India

European Union

Mexico, Korea

Brazil, South Africa,

Indonesia Center of Gravity

Japan

Top Down Target Setting (National targets negotiated internationally based on global goals)

Bottom Up Target Setting (National targets set unilaterally based on domestic politics)

Weak Accountability

(Limited institutions and noncompliance consequences)

Strong Accountability

(Expansive institutions andnoncompliance consequences)

Climate of Despair? 9

Climate talks should continue, and with the greatest possible speed and seriousness, but we must not allow them to dominate our imagination about how to deliver climate solutions.

sharing process versus a “bottom-up” process that would allow each nation to determine unilater-ally its own mitigation ambition. The horizontal axis shows where nations stand on the question of whether their own mitigation obligations should be subject to strong, legally binding international accountability, backed by economically significant consequences for noncompliance. Each nation is grouped with like-minded countries with the size of the group shown based on the group’s combined greenhouse gas emissions. The figure shows that most of the world’s major emitters — perhaps not surprisingly — wish to set their own mitiga-tion goals unilaterally and without the oversight of strong international institutions or the threat of coercive consequences for noncompliance.

This political landscape is even clearer today than just a few years ago. In 2009, for example, Japan seemed willing to match or exceed Europe’s climate ambition. But after the 2011 nuclear disaster and resulting public drive for phasing out nuclear power, Japan has moved climate change to the back burner. In its post-Durban submission, Japan focused on reductions in emissions by the mid-century instead of 2020. It may go further later this year and weaken its climate goals for 2020. Among major economies, Europe is the excep-tion in favoring a science-driven burden-sharing approach within a strong legal compliance frame-work. Admittedly, political conditions may change by 2020 but at a minimum the chart shows the starting point for the post-Durban talks. The center of gravity in global climate talks among major powers is for a new climate agreement that would allow nations to set their own level of mitigation ambition without the fear of coercive consequences for noncompliance. The relative constancy of national climate positions creates ample reason to question whether the Durban process will yield an agreement that redeems the past two decades of relatively ineffective climate diplomacy.

Looking at the weighted average of the interests of the major powers — the center of gravity of global climate talks — nations may simply inch toward a system that offers marginal improvements over today. The post-2020 agreement, for example, may create a new level of international transpar-ency about what countries are doing and thereby facilitate political accountability and inform future negotiations. In its strongest form, the new agree-ment might even mobilize new private funding for climate action through, over time, a combination of nationally administered levies or private-sector mandates. Nations may agree to increase public funding to a variety of existing and new multi-lateral development mechanisms, including the newly announced Green Climate Fund. But on the fundamental question of mitigation commit-ments, nations are unlikely by 2015 to overcome the disagreements that have bedeviled climate negotia-tions all these years. The safe bet is that mitiga-tion commitments, even if extended to all major economies and made legally binding in 2020, will be determined domestically based on politics rather than negotiated internationally based on science. At least, that is what past negotiating behavior and current national policies would suggest. While such an agreement could represent genuine progress compared to the past, of course, it would not stop global emissions from increasing dramatically above existing levels for the next two decades and this in turn could move the 2°C goal well beyond reach, absent a dramatic turn of events.

The point here is not to denigrate the United Nations process, but rather to admit that despite the tireless efforts of many smart, well-intentioned people, climate negotiations have not delivered sufficient results and are unlikely to do so anytime soon. Continuing to work toward a comprehensive multilateral system may make perfect sense as a long-term solution, of course. But believing that UN climate talks represent the key to action in the

The German Marshall Fund of the United States10

near- to medium-term seems at odds with ample evidence to the contrary. Climate talks should continue, and with the greatest possible speed and seriousness, but we must not allow them to domi-nate our imagination about how to deliver climate solutions.

Climate of Despair? 11

Expected shortcomings in global climate talks matter less than what the world’s major emitters actually do in practice, of course.

The policies and practices of the United States, in particular, matter a lot. The United States has done more to cause the climate crisis than any other nation and has enormous untapped potential to help find solutions. If properly aligned by sound policy and strong political will, U.S. innovation, venture capital, and market power could do great things to speed the global clean energy revolu-tion. Convincing the nations where emissions are growing fastest (China and other emerging econo-mies) to take ambitious climate action may prove impossible if the United States is standing still.

This is why many international observers and perhaps most Europeans feel disbelief (and perhaps some anger) about the state of climate policy in the United States. Not only did the U.S. Senate decline to enact a strong climate bill in 2010 when it had a chance, but also President Barack Obama and environmentalists alike concede reluctantly that a comprehensive domestic climate policy remains beyond reach for the foreseeable future. In this section, I examine the origins and implications of these developments.

In December 2009, at the Copenhagen climate summit, President Obama pledged that the United States would reduce its emissions in the range of 17 percent below 2005 levels by 2020. While many felt at the time that the United States should do more, President Obama’s pledge represented a major departure from the climate goals of his predecessor, George W. Bush. In 2008, President Bush warned that U.S. emissions would continue to rise until 2025, meaning that in 2020 emissions would be 6.5 percent above 2005 levels.16 The 23.5 percentage 16 Based only on energy-sector emissions from the U.S. Energy Information Administration’s Annual Energy Outlook in 2008. Energy Information Administration, Annual Energy Outlook 20008, June 2008, http://www.eia.gov/oiaf/archive/aeo08/aeoref_tab.html.

point gap between the Bush and Obama policies, the Obama administration argued, compared favorably to Europe’s pledge in 2009 to reduce its emissions 20 percent below 1990 levels by 2020, particularly as Europe would begin 8 percent below 1990 in 2012 levels under the terms of the Kyoto Protocol. While in Copenhagen, President Obama also joined other world leaders in promising to help mobilize from public and private sources $100 billion a year for climate action in developing countries by 2020, starting with $10 billion a year in public money from 2010 to 2012.

Today, the conventional wisdom appears to be that the United States is badly off track in its emissions pledge. In contrast, the international media does not portray the same failure of the international community when it comes to mobilizing public and private financing for climate action in devel-oping nations. In reality, the opposite is true. The United States is drifting toward a partial success on emissions reduction, but the United States and other donor nations have yet to really develop a game plan on climate finance beyond 2012. The paragraphs below explain why U.S. emissions may decline in the next decade, potentially to a level close to President Obama’s Copenhagen pledge.

Myth of U.S. Inaction

In contrast to international perceptions, the United States appears to be drifting toward lower emis-sions, potentially near the range of its Copenhagen pledge. This has been accomplished partially through intentional action and partially through pure happenstance.

The United States went to Copenhagen with a set of emissions projections that showed emissions rising slowly over the next decade. Just three years later, U.S. emissions have fallen precipitously and are projected to stay relatively flat until 2020. The new official estimate projects U.S. energy-related emis-

America Adrift2

The United States appears to be drifting toward lower emissions, potentially near the range of its Copenhagen pledge.

The German Marshall Fund of the United States12

percent reduction from 2005 levels.18 Combined with the reductions outlined previously, these poli-cies could reduce U.S. emissions by 10.4 percent of 2005 emissions, over three-fifths of the way to the 17 percent reduction pledge from Copenhagen. In many ways, this figure is the best prediction of where the United States is heading because while economic or political events could reduce emissions further (as the paragraphs below demonstrate), in the next few years Washington is perhaps just as

18 Emissions reductions calculated as the reductions of the No Sunset case relative to the reference case in 2020 from the EIA AEO 2011. See http://www.eia.gov/forecasts/archive/aeo11/index.cfm.

Figure 3a1

1 This chart was prepared by Samuel Grausz of Climate Advisers.

4,500

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sions to be 7.5 percent below 2005 levels by 2020.

This decline in emissions has been brought about by a number of intentional and inadvertent developments, including the stronger than expected recession, unexpectedly high oil and low natural gas prices, ambitious new automobile efficiency regulations, accelerated shut downs of coal power plants, policy action in California and other states, and many other factors. These ongoing reductions, reflected in the line labeled “Current BAU” in Figure 3a, mean that the United States is on track to achieve 40 percent of its Copenhagen targets.

These official predictions, however, do not include several additional factors that are widely expected to drive U.S. emissions lower by the end of the decade. First, new greenhouse gas regu-lations being developed by the Obama administration under existing laws, for example, could reduce emissions by an additional 2.3 percent by 2020.17 Second, the U.S. Congress will probably extend expiring incentives, tax credits, and subsi-dies for the clean-energy sector through 2020 and if it does, those policies could net an additional 0.6

17 Dallas Burtraw, Anthony Paul, and Matt Woerman, “Retail Electricity Price Savings from Compliance Flexibility in GHG Standards for Stationary Sources,” RFF Discussion Paper, no. 11–30 (July 2011), http://www.rff.org/RFF/Documents/RFF-DP-11-30.pdf.

These policies could reduce U.S. emissions

by 10.4 percent of 2005 emissions, over

three-fifths of the way to the 17 percent reduction pledge from

Copenhagen.

Source: EIA, Burtraw et al 2011, NEPI

Climate of Despair? 13

Figure 3b1

1 This chart was prepared by Samuel Grausz of Climate Advisers.

ExistingDrivers

-10.4% 

-7.5% 

• Economic recession • Large shale gas

discoveries • High oil prices • Improvements in

technology • New automobile

regulations

• California ETS (AB 32) • Other

Expected Possible Non-Policy Uncertainty

1. Regulation of CarbonDioxide from CoalPower Plants

2. Extension of existingEnergy Policies

3. Clean Energy PortfolioStandard

4. Geothermal heat pumps

5. Technologicaldevelopment

6. Economic growth rate 7. Oil price

-15.5% 

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(7)

(6)

(5)

Policy Drivers

-1.5% 

U.S.  Copenhagen Pledge (-17%) 

U.S.  Emissions  in 2005  

• •

Low natural gas prices Coal plant retirements

likely to weaken existing policies as it is to enact stronger policies. This level of action in the United States — roughly 10 percent below 2005 emissions by 2020, is by no means sufficient but it is already more than most informed observers assume and far better than the international community expected of the United States during the Bush administra-tion. Moreover, that level of mitigation is about what the 2009 cap-and-trade bill that died in the U.S. Senate would have required of the United States domestically. While the cap in that bill was 17 percent below 2005 levels by 2020, roughly half of those reductions would have been achieved by

financing emission reduction projects in other countries via carbon markets.19

A number of other policy develop-ments could move the United States even closer to its Copenhagen pledge. Should Congress enact a new Clean Energy Stan-dard (CES) mandating a portion of U.S. electricity come from renewable sources, as President Obama and a bipartisan group of senators have proposed, this policy could reduce U.S. emissions by 200 million metric tons in 2020.20 Similarly, a subsidy for residential geothermal heat pumps — a comparatively noncontroversial idea — could eliminate another 50 million metric tons. In combination, these policies would reduce U.S. emissions by 15.5 percent rela-tive to 2005.

In addition, one can image a number of possible economic events that could reduce emissions even further. Faster than expected energy-related technological development could reduce emissions by 200 million metric tons, continued lack-luster growth by the U.S. economy could reduce emissions by another 183 million metric tons, and higher than expected oil prices (quite plausible given the recent

upswing in prices and confrontation with Iran)

19 Energy Information Administration, Energy Markey and Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 2009 (Energy Information Administration, August 2009), http://www.eia.gov/oiaf/servicerpt/hr2454/pdf/sroiaf(2009)05.pdf.

20 Alan Krupnick et al., Toward a New National Energy Policy: Assessing the Options (National Energy Policy Institute and Resources for the Future, November 2010), http://nepinstitute.org/get/RFF_Reports/RFF-NEPI-Full-Report-Final-Nov-2010.pdf.

The U.S. political outlook for aggressive, long-term climate action remains utterly depressing.

Source: EIA, Burtraw et al 2011, NEPI

The German Marshall Fund of the United States14

could knock off another 127 million metric tons.21 These economic occurrences, without a spur from new policies, would reduce U.S. emissions to 18.9 percent below 2005 emissions.22 Combined together with the above mentioned possible policy efforts, these policies and events would reduce U.S. emis-sions to as much as 24 percent below 2005 emis-sions.

These estimates are drawn together in Figures 3a and 3b. The top line in Figure 3a is the projection of U.S. Energy-related Emissions in 2009 by the Energy Information Agency (EIA), the estimate immediately prior to Copenhagen. The next line down is the most recent projection of U.S. energy-related emissions by the EIA and the subsequent are lines potential trajectories for U.S. emissions if the expected and possible policy drivers are success-fully implemented or the Copenhagen goal is met. The arrows in Figure 3b show the size of the impact of these policy drivers, sub-divided based on the individual impact of each policy driver. The far right arrow shows the range of uncertainty about U.S. emissions, centered around a world in which the expected policy drivers are successfully imple-mented.

Importantly, these optimistic figures are illustra-tive and not predictive. With a little luck, the U.S.

21 Emissions reductions calculated as the reductions of the High Technology, Low Growth, and High Oil Price case relative to the reference case in 2020 from the EIA AEO 2011. The High Tech-nology case assumes earlier availability, lower costs, and higher efficiencies for equipment in the residential, commercial, and industrial sectors along with lower fossil, renewable, and nuclear costs in the electric power sector. The Low Economic Growth case assumes that real GDP grows at an average annual rate of 2.1 percent, down from 2.7 percent in the reference case. The High Oil Price case assumes that non-OECD growth is higher by 1 percent each year, resulting in an oil price of $200 per barrel in 2035. See http://www.eia.gov/forecasts/archive/aeo11/index.cfm.22 There is likely some incompatibility between these different economic events that would make their emissions less than completely additive. Faster technological development, for example, would likely accelerate economic growth, while higher oil prices would create incentives for faster technological devel-opment.

economy will rebound quickly and oil prices will moderate. Regardless, even the more conservative numbers presented at the outset disprove the inac-curate but seemingly widespread assumption that U.S. emissions are still growing. Instead, the United States is drifting toward substantially lower emis-sions and might just possibly land within range of its Copenhagen goal. While U.S. politicians deserve only a portion of the credit, the climate results will be just as real and will help buy time for the United States and the world to sort out more durable solu-tions.

The Great Unraveling

Even though the U.S. outlook for climate action through 2020 seems a bit encouraging, at least compared to dismal international expectations, the U.S. political outlook for aggressive, long-term climate action remains utterly depressing. The two major political parties are actually farther apart now on climate than they were toward the end of the Bush administration. In 2008, most conservative political leaders — including Republican presidential candidate Senator John McCain, many Republican state governors, and several moderate Republican members of the U.S. Senate — supported mandatory national limits on greenhouse gases. To be sure, this was a minority view among conservatives but enough Republicans were prepared to join with Democrats that the outlook for new emission limits looked promising. In fact, political momentum had built to the point that even most opponents of binding emissions targets did not challenge the scientific consensus on climate. How could they, it seemed, when the U.S. National Academy of Science, the venerable body established by President Lincoln in the 19th century to advise the U.S. government on science ques-tions, warned unequivocally that “climate change

Climate of Despair? 15

Shockingly, it is no longer politically acceptable for conservative U.S. politicians to support climate policies or publicly accept basic climate science.

is occurring, is caused largely by human activities, and poses significant risks.”23

Today, the U.S. political picture on climate change is entirely different. Shockingly, it is no longer politically acceptable for conservative U.S. politi-cians to support climate policies or publicly accept basic climate science. Nothing captures this new reality more effectively than the contest within the Republican Party to select a candidate to stand against President Obama in this November’s presi-dential election. Over the past year, not one of the eight major Republican candidates described the science of climate change as conclusive and several have denied human activity is the primary cause of global warming. A few have even called climate change a hoax. All the conservative candidates said they opposed new mandatory limits on U.S. emis-sions. Indeed, they have competed to be seen as the most hostile to the climate protection agenda. Mitt Romney, for example, has eagerly disavowed the cap-and-trade approach he helped enact into law almost a decade ago when he was governor of Massachusetts. The former speaker of the House of Representatives, Newt Gingrich, described his past support for climate policies and his willingness to appear in advertisements for climate solutions with former Speaker of the House Nancy Pelosi, a national Democratic leader, as ”the dumbest single thing I’ve done in the last few years.”24 The Repub-lican candidates, furthermore, have largely opposed the Obama administration’s support for the renew-able energy sector and vowed to instead support policies aimed at accelerating the already growing production of U.S. fossil fuels. Perhaps nothing captures the mood of conservatives more accurately than Governor Romney’s Believe in America plan

23 National Academies, “Strong Evidence on Climate Change Underscores Need for Actions to Reduce Emissions and Begin Adapting to Impacts,” News from the National Academies, May 19, 2010, http://www8.nationalacademies.org/onpinews/news-item.aspx?RecordID=05192010.24 Fox News Forum, December 3, 2011.

for jobs and economic growth. The plan states, “The United States is blessed with a cornucopia of carbon-based energy resources. Developing them has been a pathway to prosperity for the nation in the past and offers similar promise for the future.”25 The plan makes no mention of climate change anywhere in its 160 pages.

Furthermore, it’s not just the Republican presiden-tial candidates who are running away from climate policy, but also conservatives in Congress. In late 2011, the nonpartisan political magazine National Journal interviewed 65 congressional Republicans about their views. Only one-third said they felt the science behind global warming was clear and compelling. Another third refused to answer the question, presumably because doing so would force them to choose between scientific reality and ideo-logical necessity.

To be fair, many liberal politicians too are ducking the climate issue. President Obama didn’t mention it in his annual State of the Union address in 2011. In this year’s address, the only mention came in the form of a concession that the differences in Congress are too great to enact climate legisla-tion this year. Climate change does not generally appear in the President’s day-to-day speeches, furthermore, and he does not mention the topic on his reelection website, not even under the section entitled “Energy and the Environment.”26 For a politician who has described climate change as one of the greatest threats to U.S. global security, that omission speaks volumes about the state of the U.S. political scene on global warming. With U.S. political leaders saying so little, domestic media coverage of climate change has fallen dramatically

25 Mitt Romney, Believe In America: Mitt Romney’s Plan for Jobs and Economic Growth, 2011, 93, http://mittromney.com/blogs/mitts-view/2011/09/believe-america-mitt-romneys-plan-jobs-and-economic-growth.26 “President Obama’s Record on Energy and the Environment,” Obama for America, n.d., http://www.barackobama.com/record/environment.

The German Marshall Fund of the United States16

— down a full 42 percent in 2011 from the all-time high in 2009.27

Polarizing Forces

The natural question, of course, is why? Why did the emerging U.S. political consensus for climate action, which grew steadily for most of the past decade, unravel so completely in just two years?

Some analysts falsely attribute these policy shifts to a major rise in climate skepticism in the Amer-ican public, ostensibly in connection with media reports of since-disproved allegations of bias among climate scientists (the so-called Climat-egate episode, when stolen emails from a U.K. university were inaccurately portrayed by climate skeptics in this way). This explanation does not hold water. The percentage of Americans who say they believe in global warming has fluctuated in recent years, but within a relatively narrow band with a majority always believing in global warming. A Pew study, representative of other polls, shows belief in global warming at 63% in 2011, down from its peak of 77% in 2011 but up from 57% in 2009. Similarly, belief that human activity is causing global warming has remained relatively constant. According to the same Pew study, among those who believe that global warming is occurring, 60% believe that it is being caused by humans, down from 66% in 2009, but up from 58% in 2010.28 (These percentages are the same or only slightly lower than attitudes in most of Europe and else-

27 Douglas Fischer, “Climate Coverage down Again in 2011,” The Daily Climate, January 3, 2012, http://wwwp.dailyclimate.org/tdc-newsroom/2012/01/climate-coverage-2011.

28 The Pew Research Center for the People & the Press, “More Moderate Republicans See Evidence of Warming,” December 1, 2011, http://www.people-press.org/files/legacy-pdf/12-1-11%20Global%20warming%20release.pdf.

where.29) Indeed, U.S. public concern about climate change has actually grown significantly in the past 15 years. The percentage of Americans who support stronger federal policies (62 percent) is up substan-tially compared to 1997 (when the Kyoto Protocol was negotiated) and only slightly below the all-time high in 2007.30

Admittedly, with high unemployment, a weak economy, and hundreds of thousands of U.S. soldiers at war, Americans view climate change as a lower priority than many other national and global challenges. But the same is also true in Europe and other parts of the world. A 2010 German Marshall Fund poll, for example, found that fighting climate change ranked below managing international economic problems and combating terrorism in the United States and most European countries.31

Yet clearly, despite the relative constancy of U.S. public attitudes, a number of powerful forces have helped polarize and unravel climate policy in recent years. Included among them are the following.

Misleading Media

Americans today are more likely than not to hear inaccurate information about climate science from U.S. media for a couple of reasons. First, tradi-tional media outlets (those generally perceived as relatively objective and unbiased), in the name of balance and to create viewer interest, tend to give roughly equal weight to climate deniers and conventional climate scientists even though the scientific consensus on climate change is clear.

29 Stewart Patrick, “The Internationalist: Public More Willing Than Politicians to Address Climate Change,” Council on Foreign Relations - The Internationalist, n.d., http://blogs.cfr.org/patrick/2011/11/30/public-more-willing-than-politicians-to-address-climate-change/.30 Krosnick, “American Public Opinion on Climate Change and Its Impact on Voting in Congressional and Presidential Elec-tions.”31 Transatlantic Trends 2010, German Marshall Fund, http://trends.gmfus.org.php5-23.dfw1-2.websitetestlink.com/?page_id=3175.

Depending on where they get their news,

Americans hear about and believe

very different climate realities.

Climate of Despair? 17

Journalists are either unable to distinguish between fact and opinion, or the conflict between main-stream scientists and marginal scientists is too good a story to ignore. Either way, the U.S. public is led to believe that the science of climate change is far more uncertain than it really is.

Second, depending on where they get their news, Americans hear about and believe very different climate realities. The number of news outlets has proliferated in the information age and so has the tendency of U.S. media companies to target specific audiences. Whereas once everyone in America watched or read news from a seemingly apolitical source (think Walter Cronkite), today we have right-wing media and left-wing media. Liberals on the coasts get their news from such sources as the New York Times and MSNBC, which generally affirm the scientific consensus on climate change. Conservatives, in contrast, watch the Fox News channel, read the Wall Street Journal, and listen to the Rush Limbaugh radio show, which are hostile to climate policy. One recent study found that Fox News stories and commentary were far more dismissive of climate change in tone, less likely to include claims that affirm the global scientific agreement, and far more likely to feature climate change deniers than CNN and MSNBC.32 Liberals see in this a conservative conspiracy to spread false-hoods, citing other studies showing, for example, that Fox News viewers are far more likely than the general public to hold inaccurate opinions on certain objective facts relating to President Obama’s policies.33 Conservatives counter that their news media outlets merely rectify decades of 32 Lauren Feldman et al., “Climate on Cable: The Nature and Impact of Global Warming Coverage on Fox News, CNN, and MSNBC,” The International Journal of Press/Politics (November 2, 2011), http://hij.sagepub.com/content/early/2011/10/13/1940161211425410.abstract.33 Ibid.; Chris Mooney, “Fox News Viewers Are the Most Misin-formed: A Seventh Study Arrives to Prove It — and Vindicate Jon Stewart!,” November 22, 2011, http://thinkprogress.org/romm/2011/11/22/374434/fox-news-viewers-misinformed-study-jon-stewart/.

liberal media bias, restoring accuracy, fairness, and balance to news and commentary. In any event, Americans are exposed to two fundamentally different climate realities.

Party Identification

Partially due to the increasingly polarized media, Americans increasingly consider the environ-ment a purely liberal cause that is championed by coastal, educated elites and Hollywood celebrities. Adding to this perception, the political champions of climate policy have been mainly Democrats. Al Gore, a Democratic Party standard-bearer as vice president from 1992 to 2000 and party leader as presidential nominee in 2000, literally wrote the book (Earth in the Balance) and starred in the movie (An Inconvenient Truth) on climate change. Along the way, he picked up the Nobel Peace Prize and an Oscar for his work, presumably voted for by well-placed liberals in Scandinavia and Hollywood, respectively. The Democratic Party’s 2004 presiden-tial nominee, John Kerry, is the strongest supporter of climate action in the U.S. Senate. After winning election in 2008, President Obama made climate legislation a high legislative priority.

If the secret to winning elections is, as is often said, drawing a sharp contrast with the opposition, it is perhaps not totally surprising that Republi-cans have come to define themselves as the party opposed to climate policy. All of this is not to criticize Vice President Gore or others — climate champions of any ideological stripe deserve praise, in my opinion, for their leadership. My goal here is to merely highlight the fact that climate change in the United States both benefits and suffers from a strong association with the Democratic Party.

Rise of the Tea Party

Perhaps partially as a result of the polarization of the media and the strong identification of climate change with the liberal agenda, the intensity of

The German Marshall Fund of the United States18

Climate policy seems to symbolize all that

is wrong with the Obama administration in the eyes of staunch

conservatives and to epitomize everything the

Tea Party opposes.

opposition to climate policy among the most vocal and politically active conservative voters — many of whom consider themselves part of the “Tea Party” popular conservative movement — has increased remarkably since 2009. This is evident at conserva-tive political rallies and public policy events. Before 2009, climate policy hardly surfaced at such gather-ings. Now opposition to “cap and trade” policies — frequently characterized as “a job killing energy tax” — is frequently among the top ten policy posi-tions in general political discussions among conser-vatives. Indeed, political candidates use opposition to climate policy as a short hand to signal their conservative credentials. This is perhaps why campaign stump speeches and political advertise-ments by conservatives often highlight the candi-date’s resistance to climate policies.

The opinions of staunch conservatives appear firm, moreover. A Yale University poll in 2011 found that a majority of Tea Party members do not believe in global warming (compared to just 30 percent of Republicans as a whole), and whereas only 20 percent of other voters say they have all the infor-mation they need to form a firm opinion about climate change, a strong majority of the Tea Party feels this way.

Indeed, opposition to climate policy has become a defining characteristic of the Tea Party movement. Climate policy seems to symbolize all that is wrong with the Obama administration in the eyes of staunch conservatives and to epitomize everything the Tea Party opposes — restrictions on personal liberty, impediments to economic growth and energy jobs, increases in foreign aid for developing nations, and the loss of U.S. sovereignty to the United Nations and the international community.

Campaign Contributions

Money may not buy U.S. elections but it sure can influence them. In 2008, the biggest spender was victorious in 30 out of 32 U.S. Senate races and in

397 out of 426 races in the U.S. House of Represen-tatives.34 Research has shown that political adver-tising works — it influences voter attitudes and decisions. Advertising in new and old media can be exceptionally expensive in U.S. media markets. To stay in office, a typical member of the House must raise $1.1 million and an average senator must raise $6.5 million for each election, and this doesn’t count the hundreds of millions of dollars politicians help raise for national political parties and outside groups. Omnipresent fundraising pressures make candidates for national office sensitive to the fund-raising consequences of their climate and energy policies.35

In the 2010 election cycle, environmental groups contributed just over $5 million to national candi-dates, political parties, and related groups.36 During this period, energy and natural resource companies contributed nearly $76 million.37 More than 75 percent of industry contributions went to Repub-licans, and the vast majority of this group opposed climate legislation. A large share of the remainder of industry contributions went to Democratic politicians who also opposed greenhouse gas limits. Alternative-energy companies, a potential industry counter force, accounted for a mere $2 million in campaign contributions.38 In the wake of the U.S. Supreme Court decision in the Citizens United case in 2010, which did away with legal restrictions on political spending by corporations, the campaign contribution imbalance between climate advocates and climate opponents has no doubt grown. Figures 34 Open Secrets, “Money Wins Presidency and 9 of 10 Congres-sional Races in Priciest U.S. Election Ever,” Open Secrets Blog, n.d., http://www.opensecrets.org/news/2008/11/money-wins-white-house-and.html.35 Ibid.36 Open Secrets, “Environment,” n.d., http://www.opensecrets.org/industries/indus.php?ind=Q11.37 Open Secrets, “Energy/Natural Resources,” n.d., http://www.opensecrets.org/industries/indus.php?ind=E.38 Open Secrets, “Alternative Energy Production & Services,” n.d., http://www.opensecrets.org/industries/indus.php?ind=E1500.

Climate of Despair? 19

for this year may reveal unprecedented levels of political activity by the fossil fuel industry in the 2012 elections.

Lobbying

At the height of the effort to pass federal climate legislation, during 2009, pro-environmental groups spent a record $22.4 million on federal lobby efforts — double the average annual expenditure for these groups between 2000 and 2008.39 In contrast, oil and gas companies spent $175 million on lobbying during this same period, outspending climate protection advocates nearly eight-fold. Overall, energy and natural resource companies spent over $400 million.40 One opponent of the climate bill alone, Exxon Mobil, spent $27.4 million in lobbying in 2009 — more than all environmental groups combined.41 The lobbying imbalance is not confined to the cap-and-trade issue. In 2011, companies in favor of constructing the controver-sial Keystone XL pipeline from Canada spent $60 million on lobbying. Environmental groups spent $1 million that same year on pipeline lobbying.42

In light of all the above forces, it is perhaps little wonder conservative politicians have run away from the climate issue despite the widespread, though somewhat weak, support for climate action in the general public. The next pages explore whether the politics of climate change in the United States is likely to shift again soon, or whether the current dynamic has somehow become structural and might endure. 39 Open Secrets, “Environment.”40 Evan Mackinder, “Pro-Environment Groups Outmatched, Outspent in Battle Over Climate Change Legislation,” Open Secrets Blog, August 23, 2010, http://www.opensecrets.org/news/2010/08/pro-environment-groups-were-outmatc.html; Open Secrets, “Energy/Natural Resources.”41 Mackinder, “Pro-Environment Groups Outmatched, Outspent in Battle Over Climate Change Legislation.”42 Josh Israel, “Keystone XL Pipeline Backers Dwarfed Oppo-nents In Lobbying Efforts,” January 20, 2012, http://think-progress.org/green/2012/01/20/407340/keystone-xl-pipeline-backers-dwarfed-opponents-in-lobbying-efforts/.

Obama vs. the Alternative

Obviously, the two major U.S. political parties have sharply contrasting views on climate change. In a second term, President Obama would hope to 1) regulate greenhouse gas emissions under existing domestic pollution statutes (where no further congressional approval is needed), 2) enact a new law mandating a significant portion of U.S. electricity come from renewable energy, 3) promote clean energy manufacturing and exports via government funded R&D and new tax credits, 4) defend scheduled tightening of environmental standards for power plants and vehicles from attack by opponents, and 5) negotiate a new global climate agreement with legally binding emission limits for all major economies. Admittedly, few of these represent new proposals and implementing many of them may prove problematic given challenges in Congress and the courts. Nevertheless, the presi-dent’s energy goals in the second term would be relatively climate-friendly.

A Republican president, in contrast, would likely seek to follow through on campaign promises to 1) block new federal greenhouse gas regulations, 2) oppose new clean energy regulations, and 3) roll back increased government investments in the clean technology sector. Also, a Republican administration would likely 4) expand fossil fuel energy production more quickly than President Obama and 5) would not enforce environmental laws and standards as aggressively, viewing these as bureaucratic “red tape” that unjustifiably constrains economic growth and personal liberty. The goals of the two potential administrations are, and politi-cally are designed to appear, diametrically opposed.

Despite this, some observers wonder whether a Republican president might be able to accelerate U.S. climate action more effectively than a second term Obama administration. If a Republican administration were to offer reasonable climate

The German Marshall Fund of the United States20

U.S. Tax Reform, Deficits and Climate PolicyIn the most likely scenario, post-2012 elections, Washington will fail to take decisive action on climate change. One can imagine, however, a plausible scenario in which a major breakthrough occurs.

One fairly certain fact is that a breakthrough will not come in the form of a cap-and-trade law of the type considered in 2009. The cap-and-trade approach was not only opposed but vilified by enough conservatives and moderates in the Senate that the 60-vote supermajority needed to overcome a filibuster would prove impossible to achieve even if Democrats won big in the November election. The main cause: there are too many coal state senators and the cap-and-trade policy could not overcome their opposition. What’s more, the cap-and-trade debate seems to have taken all major climate policy off the table for the next few years. This means that in 2013 and immediately beyond legislative progress on climate change can only really occur via other issues.

Fortunately, there are two looming legislative issues that could potentially yield substantial climate dividends. In 2011, political brinksmanship over the U.S. debt ceiling and corresponding worries that the United States might default on its debt obligations revealed growing political concern about rising U.S. budget deficits. The U.S. deficit has exceeded $1 trillion dollars for the past three years and, absent major policy reform, is expected to grow further, fueled by the rising cost of government-paid medical care and social security and reduced revenues from slower than expected economic growth, as shown in Figure 4. The “alternative fiscal scenario shown represents the best prediction of the Congressional Budget Office. A number of influential policymakers and opinion leaders see 2013 as a moment when the president and Congress could craft a major budget and entitlement program overhaul to reduce future spending and/or increase government revenue.

Figure 4: Projected Federal Budget Deficits

Even more interestingly, in 2013 both political parties will be looking for ways to reform the federal tax code to accelerate America’s anemic economic growth, which would in turn reduce unemployment and the deficit. To spur growth, many economists recommend reducing taxes on things that promote growth (such as hard work and investment) and increasing taxes on things society wants to discourage (such as pollution and

2000 2005 2010 2015 2020 2025 2030 2035

0

25

50

75

100

125

150

175

200

0

25

50

75

100

125

150

175

200

Extended-Baseline Scenario

Alternative Fiscal Scenario

Actual Projected

Source: Congressional Budget Office. 2011. Long-term Budget Outlook. Congressional Budget Office. http://www.cbo.gov/ftpdocs/122xx/doc12212/06-21-Long-Term_Budget_Outlook.pdf.

Climate of Despair? 21

excessive consumption). More specifically, many conservatives and major U.S. companies support reducing the taxes corporations pay on their profits as the United States has one of the highest in the OECD. In reality, U.S. companies pay some of the lowest effective tax rates because many corporations move profits offshore and take advantage of various loopholes in the U.S. tax code. Simplifying the U.S. tax code and reducing U.S. corporate tax rates, however, might encourage multinational companies to repatriate profits and economic activity to the United States (where they would provide new government revenue from remaining corporate taxes). President Obama has signaled his willingness to consider lower corporate taxes as part of a broader tax reform law.1 A similar dynamic might also bring about even more important reforms to individual income taxes, which have a far larger impact on growth and the deficit, but maybe much harder to get through Congress.

Combining these factors, one can imagine a compromise tax reform law that would introduce a modest U.S. carbon tax (at say $15-20 a ton of CO2) as part of a far broader package that reigned in entitlement programs and other social welfare spending, reduced growth-inhibiting taxes on labor, investments, and corporate income, and shrank the U.S. budget deficit. If structured correctly, some of the companies that lobbied hardest against the cap-and-trade bill in 2009 might welcome this approach (because they are most affected by high corporate tax rates, even if they work hard to avoid paying those rates, and because they value regulatory certainty). As an example, a staunch opponent of cap-and-trade, Exxon Mobil, has already stated publicly that it is not opposed to a carbon tax and its investment decisions assume something akin to a carbon tax will be in place by 2020. Privately, at least some conservative lawmakers concede that a carbon tax might be a small price to pay for fundamental tax reform. Importantly, the U.S. public would not see tax reform as climate policy. Indeed, relative to other changes to entitlement programs, payroll tax rates and the like in such a bill, the carbon provisions would arguably be secondary or even tertiary for most voters. And even then, conservatives and progressives alike could support those provisions as essential to rid the United States of its addiction to imported oil, an objective that enjoys broad public support.

In addition to the significant reductions in U.S. emissions, such a grand bargain could greatly benefit the U.S. economy. Introducing a $33 carbon tax and reducing less efficient personal income taxes in a budget-neutral manner would add $4.5 billion per year to the U.S. economy.2 Studies of the impact of European climate policies found positive GDP impacts in almost every country in Europe where it was introduced.3 This additional benefit, translated into additional jobs, higher wages, and faster economic growth, could provide an additional incentive to bring the two parties together on this issue.

Opinions differ considerably among political commentators in Washington on the likelihood of major tax and budget reforms in 2013, let alone the chance of any carbon tax being in the mix. The odds are not great. Regardless, this is the most realistic scenario under which the United States would take a major new step toward climate leadership anytime soon.

1 Calmes, “Obama Offers to Cut Corporate Tax Rate to 28%.”2 Ian Parry and Roberton C. Williams, Moving U.S. Climate Policy Forward: Are Carbon Taxes the Only Good Alternative?, Discus-sion Paper, RFF Discussion Paper (Resources for the Future, February 2011), http://www.rff.org/Publications/Pages/Publication-Details.aspx?PublicationID=21470.3 NERI, University of Aarhus et al., Competitiveness Effects of Evironmental Tax Reform, 2007, http://www2.dmu.dk/cometr/cometr_summary_report.pdf.

The German Marshall Fund of the United States22

solutions, many Democrats would support them and the Republican president would hold on to most of his own party, whereas few Republicans would support President Obama on any climate policies. Some call this the Nixon-goes-to-China scenario, in reference to the idea that only a conser-vative anti-communist like Richard Nixon could make peace with communist China in the early 1970s.43 Similarly, it may take a conservative, some-what climate-skeptic president to move the United States smartly forward on climate policy.

Could Mitt Romney, Newt Gingrich, Rick Santorum, or Ron Paul — the four remaining Republican candidates at the time this report went to press — become the climate Nixon? Perhaps the most likely to take action on climate change would be Governor Romney because, among this group, he has been the most reluctant to dismiss the science of climate change and as governor he adopted forward-leaning climate policies. Governor Romney, by all accounts, is a highly educated, intelligent, and rational man — the kind who respects science, studies problems carefully, and makes evidence-based decisions. His business and public affairs record demonstrates that he is an internationalist who understands that the United States’ economic success and security depend on strong international alliances, U.S. access to global markets, and the United States’ standing in the world. One cannot help hoping that as president, he would grasp the threats posed by climate change and the United States’ obligation to lead, and would strive to take action in response to scientific evidence and foreign policy interests.

Unfortunately, this rationalist/internationalist scenario is probably wishful thinking. If a first

43 Throughout his political career, Richard Nixon was consis-tently and fervently anti-communist. So, when President Nixon decided in 1972 to re-establish contact with mainland China through a surprise visit to Beijing to meet Chairman Mao Zedong, it was nearly impossible to portray Nixon as “soft on communism.”

term president’s prime thought is about getting re-elected in four years, then the Nixon goes to China scenario seems farfetched for Mitt Romney. Unlike President Nixon, Governor Romney’s conservative credentials are somewhat suspect — many conservative voters don’t consider him conservative enough, which is why he failed to capture the Republican nomination in 2008 and has had such a hard time in 2012, despite huge financial advantages and the support of many establishment politicians. By moving to the ideological center on climate change during his first term, a President Romney would face the scorn of the conservative base. In contrast, by eschewing strong climate poli-cies altogether, a President Romney would demon-strate his focus on near-term economic growth, avoid a drop in support among arch conservatives and Tea Party supporters for whom climate policies are taboo, maximize campaign contributions and lobbying from traditional energy companies, and minimize the risk of a conservative rebellion and leadership challenge from within his own party in 2016. While Governor Romney may be a ratio-nalist and internationalist, he is first and fore-most a political animal. This willingness to revise his longtime positions on abortion, health care, climate, and a host of other issues to become viable for national office signals that fact all too clearly. Given the domestic political incentives, Europe and the world should expect that, if elected, President Romney would govern more or less in line with his anti-climate campaign positions.

Romney’s rivals — Santorum, Gingrich, and Paul — certainly have more conservative credentials but it is harder to imagine them becoming a climate Nixon. Rick Santorum describes climate change as resting on “junk science.”44 Ron Paul calls climate change a “hoax.”45 Newt Gingrich’s current energy

44 Andrew Schenkel, “Rick Santorum’s environmental record.” Mother Nature Network.45 Fox Business News, November 4, 2009.

Climate of Despair? 23

policies are summarized by the title of his book: Drill Here, Drill Now, Pay Less.46

November 2012 and Beyond

The actual outcome of the November 2012 presi-dential elections, of course, is anything but clear right now. Based on history, the two political parties have almost an equal chance of winning. Incumbents generally have a modest advantage but not during a weak economy. Polls show that voters hold President Obama partly responsible for the economy. Also, a second global economic crisis — perhaps one stemming from further trouble in the euro zone — might work against him. No president since Franklin D. Roosevelt has won reelection with a national unemployment rate above 7.2 percent.47 At the start of this year, the U.S. jobless rate was 8.3 percent and not declining fast enough. But it must be said that President Roosevelt won reelection by a large margin with unemployment around 19 percent. Voters knew he inherited the great depres-sion and the economy was starting to improve. These same factors may work in President Obama’s favor. In short, the 2012 presidential election could go either way.

Control of Congress is only slightly easier to predict. The unpopularity of Congress with U.S. voters is at an all-time high. Only about 13 percent of Americans believe that Congress is doing a good job.48 Yet, because most voters approve of their specific senators and representatives, a significant majority of incumbents are likely to win reelec-tion, as is usually the case. Nonetheless, Republican gains are expected in the U.S. Senate if for no other 46 Newt Gingrich, Vince Haley, Drill Here, Drill Now, Pay Less (2008)47 Nate Silver, “On the Maddeningly Inexact Relationship Between Unemployment and Re-Election,” FiveThirtyEight, June 2, 2011, http://fivethirtyeight.blogs.nytimes.com/2011/06/02/on-the-maddeningly-inexact-relationship-between-unemploy-ment-and-re-election/.48 “Congress - Job Rating,” n.d., http://www.pollingreport.com/CongJob.htm.

reason than more liberals than conservatives are retiring this year and these so-called open elections are notoriously unpredictable.

Despite the high level of political uncertainty about the 2012 U.S. elections, one fact provides an important insight about U.S. climate policy in 2013 and beyond. Most of the leading U.S. political forecasters predict an extremely close election that yields a divided government and/or slim majorities in both the House and Senate. President Obama is rather unlikely to win reelection and have a strong majority in both houses of Congress. Any Euro-pean or global climate policy premised on such an unlikely outcome would be risky. More likely, Presi-dent Obama will win reelection and Republicans will control at least one portion of Congress, as they currently do, or President Obama will not prevail in November and Republicans will lack commanding majorities in at least the Senate or House.

The framers of the U.S. constitution believed strongly in the virtues of divided government, minority rights, checks, and balances. These ideas, as elaborated further in the rules of the Senate and in the customary political dance between the execu-tive and legislative branches of government, mean that a highly committed minority can usually stop major changes in U.S. federal policy. This is espe-cially true when, as is the case in these times, the political atmosphere is antagonistic and ideological, and congressional majorities are modest. That kind of political environment makes legislation impos-sible to pass with only one political party’s support and bipartisan compromise almost impossible. These days, therefore, the easiest way to be right about the future — regardless of subject matter — is to predict that nothing much will happen in Wash-ington, DC.

What that means for climate policy, in practical terms, this that the United States will probably continue to drift, largely unguided and without a

President Obama and conservatives are worlds apart on climate policy. President Obama intends to use regulation and fiscal policy to promote the clean energy revolution; his counterparts care far more about expanding fossil fuel production and lowering energy prices. In the near-term, however, the inertia dealt into the U.S. political and economic system will probably keep U.S. emissions declining no matter what happens in November.

The German Marshall Fund of the United States24

national plan, toward the real but modest emis-sions reductions described at the top of this section regardless of the 2012 election outcome. President Obama and conservatives are worlds apart on climate policy. President Obama intends to use regulation and fiscal policy to promote the clean energy revolution; his counterparts care far more about expanding fossil fuel production and lowering energy prices. In the near-term, however, the inertia dealt into the U.S. political and economic system will probably keep U.S. emissions declining no matter what happens in November. More than likely, in 2013 and immediately beyond, Democrats and Republicans will prove too weak to enact much of their own domestic energy and climate agendas and the polarized political environ-ment will continue to make compromise on climate and energy issues exceptionally difficult.

To test this potentially counter-intuitive claim, Figure 5 attempts to group the economic forces and policies that are expected to drive down U.S. emissions into three categories based on how easily the new president and Congress could

change them (for better or worse). The president and Congress, for example, will have little control over the global market price of oil and natural gas, absent extraordinary political events. Also, the U.S. Federal Reserve predicts the U.S. economy will remain sluggish through 2014, regardless of the election outcome. In contrast, if elected, a President Romney could instruct the U.S. Environmental Protection Agency to slow down the schedule for adopting new national greenhouse gas regulations. But he could not stop those regulations altogether absent changes in existing laws, which a strong Democratic minority in the Senate could block by filibuster. The classification scheme reveals that most of the factors reducing or increasing U.S. emissions right now would be difficult, if not impossible, for the president and Congress to change, assuming once again that the election outcome does not yield a large majority in Congress for the party capturing the White House.

In sum, the differences on climate and energy policy between Republicans and Democrats generally, and President Obama and his eventual

Impact on Emissions

Easy Difficult Almost No Control

Increase • Delay and weaken slightly greenhouse gas and other clean air regulations

• Stop new greenhouse gas regulations

• Substantially weaken other new pollution controls

• Substantially weaken new automobile efficiency stan-dards

• Improve sluggish economy

• Reduce petroleum prices

• Overcome local opposition to coal plants

• Stop California and other state climate initiatives

• Decrease rate of technology innovation

Reduce • Enact carbon tax or other major energy tax reform

• Increase petroleum prices

• Overcome local opposition to nuclear plants

• Increase rate of clean energy technology innovation

Figure 5: Near-Term Ability of New President and Congress to Change U.S. Emissions Trajectory

Climate of Despair? 25

challenger, are significant and numerous. From a climate standpoint, it matters a great deal who wins in November. Yet when it comes to U.S. emissions this decade, those policy differences are likely to prove less important over the next few years than far larger structural forces affecting the U.S. economy. And even when decision makers could theoretically change U.S. policy, the checks and balances in the U.S. political system are likely to create inertia that would allow the United States to continue drifting along its current emissions pathway — one that represents both a major improvement over expectations a decade ago and yet a far cry from genuine U.S. climate leadership.

Toward Climate Realpolitik

The views presented above simultaneously provide reason for hope and cynicism. A strong interna-tional climate protection regime remains essential but probably will not emerge soon enough to cata-lyze global action on the scale required to avoid all but the worst climate outcomes. The United States is drifting toward modest but real reductions in its domestic emissions. Those reductions are likely to be greater under President Obama, particularly in the long-term, but emissions will probably decline no matter who captures the White House in 2012. Yet, those reductions remains highly unlikely to lead a global effort to close the gap in mitiga-tion ambition. International climate negotiations, furthermore, are unlikely to deliver an ambitious global agreement for either this decade or probably the next.

Together these insights support the need for Europe and others to experiment with new, more innova-tive approaches to climate foreign policy as a means of accelerating action in the United States and around the world. More than likely, these new strat-egies need to step-up efforts to help nations pursue other, less contentious goals that nonetheless yield genuine climate dividends as a somewhat unin-

tended byproduct. Where nations have the political will to act — whether to improve energy security, reduce energy costs, win the race for clean-energy technology, protect forests for freshwater manage-ment, or improve public health by reducing air pollution — the international community needs to remove every possible barrier and bank the climate dividends. While unlikely to close the mitiga-tion ambition gap, new approaches along these lines would minimize the damage inflicted by the lingering climate policy recession and overcome the current climate of despair. What specifically should be done along these lines? This question and others are examined in detail by the author in the forthcoming GMF essay entitled Climate Realpolitik (Spring-Summer 2012).

O f f i c e sWashington • Berlin • Paris • Brussels

Belgrade • Ankara • Bucharest • Warsaw

www.gmfus.org